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The Dow Jones Industrial Average set an all-time high four out of five days last week. In poker, that's roughly equivalent to being dealt a straight flush.

The economic news generally surpassed projections; Federal Reserve board members gave speeches that reaffirmed the central bank's accommodative stance; and on Thursday the Fed's "stress tests" certified nearly all the U.S. big banks as healthy. Investment-bank stocks, up 21% on the year, fell Friday, as their results weren't as good as expected. (More on that below.)

In the race to new highs, previous market fears took a back seat, whether the effect of federal-government spending cuts on the economy, or its unresolved debt and deficit problems, or the consumer's reaction to higher payroll taxes.

For this bull market to gain acceptance, the Standard & Poor's 500 index must take the baton from the 30-stock mega-cap Dow and confirm with a high of its own, in relatively short order. While a breather for the 2013 rally could be seen near term, the broader index, just 15 points away from its own high, is expected to race to a new high as well.

Last week, the Dow soared 2.2%, or 307 points, to 14,397.07. Friday's close completed a four-year odyssey nearly to the day from the market's closing low March 9, 2009. The Standard and Poor's 500 index jumped 2.2%, or 33 points, to 1551.18, shy of the all-time high of 1565. The Nasdaq Composite rose 2.4%, or 75 points, to 3244.37.

Labor Department jobs data out Friday were salutary and better than expected. Nonfarm payrolls added 236,000 last month, and the unemployment rate fell to 7.7% from 7.9%, the lowest since December 2008.

"Another day, another new high," quips Ryan Larson, head of equity trading for RBC Global Asset Management. The economic news, while improving, remains consistent with a modestly growing economy, he says.

Kurt Brunner, a portfolio manager with Swarthmore Group, concurs: "We're not ramping up to significant growth…[Friday's data are] just an affirmation of modest growth." Stocks were helped by Fed Vice Chairman Janet Yellen's remarks Monday, that the Fed intends "to leave accommodation until well into the recovery."

The market is "living and dying" by Fed statements, says Larson, and it's struggling with alternating comments from the hawkish and dovish camps inside the Fed. Investors wonder how long the accommodation can go on, he says. Lately, Fed statements in the main suggest the stimulus won't be retracted any time soon.

The next important signpost will be the Fed's review Thursday of bank requests for increases in dividends and share buybacks. Then there's a Fed board meeting March 19-20. If the S&P 500 hits its own high soon, call it a royal straight flush.

LAST THURSDAY, the Federal Reserve gave passing grades to 17 of the 18 largest U.S. banks in the annual exercise commonly known as the stress test. The financial institutions were subjected to various hypothetical economic downturns, including a severe recession with unemployment rising above 12%.

The results show the strength of the banking system and the recovery in its capital position since the disastrous 2008-2009 financial crisis, according to a report from Keefe Bruyette & Woods. Bank capital is at a 70-year high; the industry would still be well-capitalized under an extremely stressful scenario; and capital continues to build, the report said. All banks passed except Ally Financial, majority-owned by the government and not publicly traded.

In coming days and weeks, look for higher dividends and more share buybacks from some but not all the big banks. On Thursday, the Fed's decisions on bank capital plans, such as requests to increase dividends or share buybacks, will be revealed.

Banks in general are well-capitalized and generating record earnings in what is a lousy business environment, he says, and with much higher capital requirements than were typical before the crisis. If interest rates go up—which is the way it's looking—net interest margins could widen even if the economy just trudges along the way it is, he adds. Terril thinks JPMorgan, Wells Fargo, and Bank of America shares could rise 40% to 50% over the next couple of years.

"What's JPMorgan going to do with all that capital it's generating?" he asks. It will find its way back to shareholders somehow, he answers.

This week, look for bank stocks to move on Fed approvals or disapprovals of dividend or buyback increases. Given that the banks were allowed to modify their requests immediately following the test results, it's expected they will be able to avoid outright rejections from the Fed.

The more important part of the exercise comes this week, says Jack DeGan, chief investment officer of Harbor Advisory. The Fed is going to be conservative in what they let the banks do, he adds. Bank of America, with the housing-related potential litigation risks hanging over it, for example, will probably not be allowed a significant dividend or buyback increase, he adds.

Another way to play the banks long term is the Troubled Asset Relief Program warrants issued by financial institutions during the crisis, about which this column wrote April 2, 2012. They can represent a good opportunity to invest in the potential rise of the underlying stock, says David Marcus, the CEO of Evermore Global Advisors.

For example, the JPMorgan warrant (JPM/WS), trading at $15.45, allows the holder to buy one share at the strike price of $42.42 before Oct. 28, 2018. The warrant is in the money if the shares top $57.87—the strike price plus the cost of the warrant—by then. In April 2012, these warrants traded at $13.38. "Will JPMorgan be above $57 by late 2018? Absolutely," says Marcus.

The arithmetic is similar for the other warrants, such as COF/WS for
Capital One FinancialCOF -0.4797979797979798%Capital One Financial Corp.U.S.: NYSEUSD78.82
-0.38-0.4797979797979798%
/Date(1427836062320-0500)/
Volume (Delayed 15m)
:
2338200AFTER HOURSUSD78.82
%
Volume (Delayed 15m)
:
328549
P/E Ratio
10.223086900129701Market Cap
43517072541.9372
Dividend Yield
1.5224562293834052% Rev. per Employee
516783More quote details and news »COFinYour ValueYour ChangeShort position
(COF) and BAC/WS/A for Bank of America. All warrants expire in either 2018 or 2019. Evermore owns all three.

Why not buy the underlying stock? Marcus points out that the lower-priced warrants tie up less capital and can produce a higher percentage return. The risk, unlike the stock, is that they can expire worthless if the stock doesn't rise enough. The trading is less liquid than the underlying stock.

In the second half of the September-ended fiscal 2012, customers hesitated on purchasing during the fiscal-cliff negotiations. Even so, for the entire year sales rose 20% to $1.38 billion, while EPS increased 16% to $3.48. But that's down from 30% and 50% rises, respectively, in the previous year.

Things worsened in the fiscal first quarter ended Dec. 31, when profits rose 6% to $69.5 million, or 88 cents a share, from $66.5 million, or 83 cents, in the year-ago quarter. The revenue rise was "just" 13% to $365.5 million. F5 said that service revenue jumped 28% but product sales only 4%, partly the result of lower federal-government sales. Cue the panic.

The doubts raised among investors have hurt the stock. At Friday's close of $94.01, the stock is off by a third from highs of nearly $140 last April. Still, over the long term, it's likely that more digital data will be created year after year, and data-traffic growth shows little sign of slowing.

A lot of that traffic will be shifting to the cloud, says Charlton Reynders, CEO of Reynders McVeigh Capital Management, which has been buying F5 shares.

If anything, with the cloud being utilized more and more by governments and all kinds of businesses and consumers, digital data usage and traffic seems likely to continue rising sharply, he avers. There might be some cyclical bumps along the way but demand for popular traffic-managing products like the ADCs will continue to grow nicely. Data security is becoming more important, not less.

F5 is a bigger company now than it was a few years ago, so growth will naturally slow some. Yet 15%-to-20% growth is plenty good, especially with the stock selling at a trailing price/earnings ratio of 26 times, significantly below its average of 36 times. At the same time, its return on equity and gross margins are higher than the historical medians. Moreover, F5 has about $15 per share in cash and marketable investments and no significant debt, Reynders notes.

The company does face stiff competition, but Cisco's plans to exit the ADC market and form a partnership with Citrix should be viewed as confirming F5's lead rather than a threat. It probably will be good for ADC pricing.

Short-term problems have pushed F5 stock to a point where long-term investors can take advantage. With its leading position in the ADC market and a shelf of new firewall and security-software products coming out, F5 stands to benefit the most as the amount of information sent across the Internet proliferates.